The federal government offers agricultural subsidies to farmers in the form of direct payments, revenue assurance programs, marketing loans, disaster payments and counter-cyclical payments. These subsidies are in place to protect farmers in case their profitability declines due to poor weather, market prices and other factors.
Direct payments are given to farmers based on historical data regarding their farms, up to $80,000 per couple.
Revenue assurance programs protect farmers when their incomes are compromised due to poor weather, pest infestation or drop in market price. Likewise, disaster payments and crop insurance assure that farmers are protected in the event of natural disaster. If crops are destroyed by weather or natural disasters, the government compensates the affected farmers.
Marketing loans are provided by the federal government to allow farmers to hold onto their harvested crops and sell them when they are needed in the market. Otherwise, farmers who are tight on money might sell their crops immediately after harvest, causing the price of the goods to drop. If market prices do drop, the government offers counter-cyclical payments to reimburse farmers for lost income.